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The Guardian - UK
The Guardian - UK
Business

Pass notes No 2,853: Jaffa Cakes

Age: 83

Appearance: Seen from above, a chocolate circle 54mm in diameter, covering an area of approximately 22.9 square centimetres.

I'm familiar with the Jaffa Cake – a great British biscuit. Well, not everyone thinks they're great. Some people find the chocolate-and-orange combination quite disgusting.

A divisive British biscuit, then. And it's not a biscuit; it's a tiny cake.

Cake, biscuit – who cares? HM Revenue & Customs. Cakes are zero-rated for VAT, but chocolate-covered biscuits aren't. In 1991 McVitie's went to court to defend the Jaffa Cake's non-biscuit status.

Whatever it is, at least it's British. For now, perhaps.

What do you mean? United Biscuits, the company that makes Jaffa Cakes, is in talks with the Chinese conglomerate Bright Food about a possible takeover worth £2.5bn.

Another venerable British brand snapped up by foreigners! Not just one. Other United Biscuits brands include Jacob's, Carr's, KP Nuts, Twiglets, Penguins and Mini Cheddars.

First Cadburys and now this! Where will it end? Relax, Angry in Amersham. United Biscuits is already owned by foreigners. Two sets, in fact: the US private equity group Blackstone and the French firm PAI bought it jointly in 2006. Now they want to sell.

Why? Is the company doing really badly or something? No, not at all. Revenues are up, and earnings before interest and tax are up. There is the matter of debt, of course, and a pension deficit approaching . . .

Sorry, are you trying to talk to me about business? La la la la la la la la . . . Anyway, the deal isn't done yet. Lots of other big food groups have expressed an interest in United Biscuits, including Kellogg's, Kraft and Nestlé.

Do say: "Such an investment would create a brilliant opportunity for British brands to expand into the burgeoning Chinese snack sector."

Don't say: "If we left out the orange goop in the middle, we could probably stick a fortune in there."

• This article was amended on 5 October 2010. The original gave the area of a Jaffa Cake as 8.5 square centimetres. This has been corrected.

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